President Donald Trump’s battle with the network is dominating the headlines, but an even bigger battle is unfolding in a lower Manhattan courthouse. Are you at risk? The economics of journalism itself and war are sparking the interest of options traders.
The newly unsealed statement Friday said: microsoft And OpenAI executives threatened a “fair use” defense. new york times Lawsuit. The defense depends on showing that the accused product is neither a substitute nor a direct competitor of the source work.
According to unsealed documents, OpenAI executives reportedly acknowledged that the company’s chatbots are indeed an “existential threat” to journalism, delivering information directly and giving readers click-throughs, The Wall Street Journal reported.
OpenAI allegedly copied millions of copyrighted articles for training purposes and may have exploited hacking to obtain them, with Brent Hecht, Microsoft’s director of applied sciences, reportedly calling the training “the greatest labor theft in human history,” according to the Washington Post, while the company’s own data shows the Times’ click-through rate has plummeted.
Meanwhile, according to the Financial Times, OpenAI co-founder Greg Brockman reportedly wrote in 2017 that he “very much hopes we can make hundreds of millions of dollars” from commercializing the technology, and is said to have responded, “Oh, good!” when told that an employee had discovered a hack behind the paper’s paywall.
These findings significantly increase the chances that the Times will prevail in a case that could result in a major settlement and licensing agreement, or, if it fails, a devastating outcome for the defendants and a huge payout for the plaintiffs.
The only thorn in the side for the Times was a statement of interest issued by the Justice Department on September 1, asking courts to rule that training AI models on copyrighted works is fair use, citing national security. The argument goes that limiting U.S. systems to training on anything a foreign adversary can somehow access risks giving up an insurmountable lead.
Given the enormity of the problem, you might think this would garner more investor attention, but New York Times stock has been flat since the beginning of the year and was little moved on Friday.
New York Times Co., YTD
But options trading is heating up. At the core of the flow was the purchase of approximately 4,400 contracts of the October 72.5/77.5 call spread at a debit of $0.925, betting just 1.3% of Friday’s closing price to gain at least 4.6% by October expiry and a potential of more than 10% on upside to the average analyst target of $77.73. The simultaneous volume of the 62.5 and 65 puts in October suggests that the same trader may have further reduced spending by selling lower puts just below the August low.
The October expiration date hints at expectations that a summary judgment judgment or settlement could be reached within weeks, raising the possibility of an increase in unsealed emails.
But if the risk is a negative surprise that leads to a new low, and your short-term goals are in line with analyst consensus anyway, then instead of trying to figure out whether the option premium is too high, too low, or “just right,” why not invest in a stock alternative with clear risk and reward and lower capital usage? The 65/77.5 call spread has an upside of just over $7 to a downside of just over $5, with minimal outside premium expenditure.
In other words, capital is low, risk is clear, and payouts are asymmetric.
Disclosure: Tidal owns/holds all securities mentioned in the article.
All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, its parent or affiliate companies, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided as part of editorial output for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of a financial or investment advisor.
This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor.
Click here for full disclaimer.
